Romania’s three-month old government collapsed this week, increasing the chance of early elections this year which would bring forward much-needed fiscal consolidation. That would ease investors’ concerns about the public finances, albeit at the cost of weaker growth. Meanwhile, Poland’s controversial judicial reforms pushed through this week are unlikely to have major macroeconomic implications, but disputes with the EU are likely to heat up as negotiations for the 2021-27 EU budget continue. Finally, the coronavirus outbreak in China doesn’t pose a major threat to Emerging Europe. While Central Europe could be hit by supply chain disruptions, the region would receive a boost from lower oil prices.
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